What You Gonna Do When the SCA Comes for You?
In this week’s global freight updates, we’ve got a vessel under arrest, underlying causes for U.S. port congestion, solid increases in import prices, a partial strike at Eastern Canada’s biggest port, and the ongoing, pandemic-induced container crisis. Up first, let’s dive into the latest news in the Ever Given saga which is the Suez Canal Authority’s (SCA) formal arrest of the vessel that can’t seem to stay out of trouble.
After an Egyptian judge officially released a court order allowing the SCA to seize the Ever Given last week, the SCA has announced that it will continue to hold the ship in Egypt until its $916M compensation claim is paid in full, causing quite the stir amongst the ship’s managers and insurers. As a result, the vessel’s charterer, Evergreen, is launching its own investigation against the scope of the claim and court order while also urging all of the parties involved to try and reach a settlement agreement in an attempt to free the trapped freight as soon as possible.
Over in the U.S., severe cargo delays stemming from the current container crunch keep plaguing the LA-LB ports with the blame largely falling on the rise in pandemic-induced demand for physical goods. However, these problems existed well before the COVID-19 breakout. According to JOC.com, “huge cost increases, limited ability to automate terminals, chronic avoidable disruption during contract negotiations, and far lower productivity and working hours compared with ports in Asia and elsewhere around the world are at the core of the issue.”
While industry leaders work to fix these problems, U.S. import prices are rising higher and higher because of the limitations these supply chain constraints are placing on the pent-up demand that’s being financed by fiscal stimulus checks and sustained by increased access to coronavirus vaccines. Based on Reuters’ data, “import prices rose 1.2% last month after advancing 1.3% in February. The fifth straight monthly gain lifted the year-on-year increase to 6.9%, the largest rise since January 2012. Import prices rose 3.1% on a year-on-year basis in February.”
And the cherry on top of all of this is the partial strike at the Port of Montreal that was scheduled to start this past Wednesday. Not only will this strike further escalate the port congestion across North America (given the projected 30% drop in the port’s capacity), but it will also most likely add to the already lengthy waits and soaring shipping costs logistics professionals are encountering worldwide. At one point in time, transporting a standard 40-foot container from China used to average around $1,000, but now that there’s an ongoing container crisis, some shippers and forwarders are having to pay in excess of $10,000 for the same exact space.
To learn more about how these issues are similarly affecting European ports or to get the details of the other top stories for this week, check out the following article highlights:
We’re Nowhere Near Out of the Thick of It Yet
From uncertainty surrounding Ever Given’s impending insurance claim; to the mounting traffic jam of cargo vessels; to the necessity of supply chain fluidity; to dealing with post-Brexit change; to stormy air cargo markets, it seems like the only guarantee in shipping is that the current market volatility is here to stay — at least for now.
And, although an article regarding the Suez Canal situation from Lloyd’s List states, “It’s still too early to assess the size of the likely claim on the International Group pool,” other, more immediate impacts are moving fast through global ocean shipping networks. To see what we mean, check out the update from one of our Asian-based partners:
Please kindly note that the space situation, especially on the USEC/GULF loop, will be significantly limited throughout April and May.
*** Since a total of 5 voyages from SEA to USEC were blanked during March alone, all space on USEC/GULF has been overbooked until the end of April.
*** The Ever Given incident will cause even more blanked sailings during weeks 16 and 17. Two weeks ago some carriers, including MSC, MSK, CMA, ONE, COSCO, etc., were already forced to outright cancel FAK bookings.
*** Considering the impending low water levels of the Panama Canal, some carriers (such as COSCO and YML) have announced new weight limitations too — around 8 tons per TEU including container tare — for shipments traveling through the canal starting last week (week 14).
*** Carriers are also expecting to face heavy equipment shortages, given that the inventory of more than half of the leading ocean liners will be depleted over the next couple of weeks. This will essentially produce a domino effect of more and more carriers limiting or even rejecting bookings to most IPI points in order to ensure most MVs will be phased in and out in time before Day 5.
Like we said, we’re nowhere near out of the thick of it yet.
Meanwhile, the congestion at the Ports of LA/ Long Beach persists and the additional capacity coming online later this year may not be enough.
To read more about this international shipping news, as well the latest on Brexit’s lingering effect on supply chains and what’s happening with air cargo, click the article highlights below.
But first, make sure to read the most recent news detailing our new, innovative trade finance solution.
And the Suez Canal Hits Just Keep on Coming
This week’s global freight updates have brought us a saturated airfreight market, the Suez Canal continuation, containers holding millions of dollars’ worth of goods idling off the LA coast, a potential for U.S. ports to receive major federal funding, and UK SMEs’ inability to absorb higher post-Brexit shipping costs.
After finally clearing the Suez Canal, shippers hoping to avoid this latest hit to the supply chain sector by turning to air better have a backup plan. Unless you want to “pay a premium for expedited service — on top of rates that typically are eight times greater than those for ocean shipping,” it’s looking like your options are pretty limited with demand outpacing capacity across all markets.
It’s still a little too early to tell how Ever Green’s misfortune will impact ports, especially in Europe, but experts predict that after a short lull in terminal operations, many will be on the receiving end of some intense congestion depending on when the cleared ships arrive at their destinations. Some sailings could get blanked if ships start arriving late given the already strained capacity, which doesn’t exactly help the incredibly low carrier schedule reliability we’ve been dealing with in recent months.
As for the ships holding millions of dollars’ worth of goods waiting for dock space at LA-LB ports, it seems like the situation hasn’t improved much for U.S. importers due to reduced capacity, a lack of labor, and pandemic-induced demand. According to the Pacific Merchant Shipping Association, “more than a quarter of imported containers at those gateways had to wait more than five days for handling once they reached the dock” in the last month alone.
With this congestion clogging most major U.S. ports, it’s become clear that the nation’s existing infrastructure could use a little (if not a lot of) TLC. When you take into account how far behind other trading nations like China the country appears to be in terms of its port and maritime framework, it makes more sense as to why the American Association of Port Authorities feels that “over the next five years, U.S. ports need $5 billion in federal funding toward water navigational projects; $20 billion for landside investments such as piers, wharves, and intermodal connections; and $4 billion for port security.”
Meanwhile over in the UK, SMEs are getting the short end of the stick when it comes to post-Brexit shipping costs and regulations. “January salmon sales, for example, plummeted 98% year on year, with beef exports only marginally less drastic, down 91%, and whisky down 63%,” based on data provided by the Food and Drink Federation. To learn more, check out the following article highlights:
Suez Canal Blockage Shows Extent of Shipping Struggles
Think you had a bad day at the office, well just imagine the week the Captain of The Ever Given has had! But hey, sometimes we just have to laugh otherwise we’ll cry, and this meme .gif we found on Reddit.com definitely does the trick! We promise it’s worth a watch.
But, back to the real news… With the backlog of vessels in one of the world’s busiest waterways, a range of new blocktrain and LCL services between China and Europe, the fresh spike in U.S. retail spending, a potential strike brewing at the Port of Montreal, and the prolonged labor crisis at sea, it’s important shippers are staying up to date on the latest events impacting international shipping.
Cargo ships are at an important decision point regarding the blockage in the Suez Canal, which is costing an estimated $400MM per hour. With no definite resolution to the problem in sight, the decision will need to be made whether or not to circumnavigate all of Africa to the south to avoid the traffic jam.
In direct response to a significant increase in demand for rail services resulting from excessive air freight rates and lengthy ocean transit times, “forwarders are spreading their services across the three China-Europe trade lanes — the northern corridor through Russia, the middle corridor via Kazakhstan and Russia, and the southern corridor via Uzbekistan and Turkey,” according to JOC.com. Even though volumes continue to surge throughout these adjusted routes, cargo flow is definitely improving, with minimal levels of congestion and network bottlenecks.
As for the U.S. import boom, the worst is not yet over given the recent round of stimulus checks. For those who thought the situation would return back to normal after this quarter, extreme rate hikes and sustained consumer demand reveal an entirely different story, placing a lot of pressure on shippers to figure out how they can get their transportation strategies up to speed.
A strike at the Port of Montreal is looming, as the government looks to continue negotiations to prevent a work stoppage. The main issues in dispute are work schedules, work-family-life balance, the right to disconnect, and disciplinary measures.
Last, but not least, roughly 200,000 seafarers remain stranded on vessels well past what’s considered a safe period of time, based on worldwide industry standards. With stringent COVID-19 border regulations and untimely quarantines on the line, many companies are desperately trying to avoid costly, time-consuming crew changes to the detriment of these essential maritime workers.
To learn more, check out the following links and give our latest blog, “How the Pandemic Has Shaped Today’s Supply Chains,” a read. Also, tune in tomorrow at 2 PM to hear our CEO, Simon Kaye, share his thoughts on “The New Frontier in Global Logistics Technology: Linking Customer Expectations to Customer Promise” – a webinar hosted by JOC.com.
It’s Time for EIS Hikes and U.S. Import Spikes
The impact of tough market conditions is continuing. From increasing Equipment Imbalance Surcharges, to warnings of import spikes across the U.S., to warehouses that are too full, to post-Brexit container logjams, to modal shifts, we’re here to deliver this week’s most pressing news in international shipping. At the top of the list is approaching carrier Equipment Imbalance Surcharges (EIS) and General Rate Increases (GRI) scheduled to hit approximately a month from now.
According to AJOT, for example, MSC announced that “effective April 12th, 2021 an EIS will be applicable for all REEFER cargo ex. AUSTRALIA and NEW ZEALAND to USA & CANADA: USD 200 per 20’ Reefer and USD 400 per 40’ Reefer.” And for those hoping to see port congestion ease throughout the ports of Los Angeles and Long Beach, “anticipating record sales in 2021, retailers expect U.S. containerized exports will increase 20 percent or more each month through June,” based on JOC.com’s data.
This means that while conditions aren’t expected to get worse, we definitely won’t see any real improvements until well after this summer given the sheer strength of sustained consumer demand. Supply Chain Dive released information supporting this expectation as well, citing the availability of vaccinations and the recent stimulus checks as two primary contributors.
The anticipated boost in consumer spending is also projected to impact other major ports across the country. According to figures from S&P Global Market Intelligence’s Panjiva, “overall U.S. seaborne imports in February were up more than 29% YoY and up 20% compared to the same month in 2019.”
Supply chain delays are forcing many retailers to rethink their inventory management strategy and the result is warehouse space is becoming very tight. A big reason why is that many companies are building inventory to help smooth the problems further upstream in their supply chains. And, the negative impact of port congestion is starting to show up on companies’ bottom lines.
Over in the UK, ports are facing similar container congestion and trade disruption as leading gateway terminals struggle to handle increased traffic resulting from major pileups of complex post-Brexit cross-Channel shipments. With these freight delays in ocean shipping and the insanely high freight rates in air, shippers and forwarders are having to get more creative in how they source and transport their goods in order to find a reasonable balance between price and transit time.
Whether that involves turning to multimodal consolidation routing solutions or sticking to local manufacturing options and skipping China altogether is ultimately up to what logistics professionals value within their own supply chain processes. To learn more about how these industry updates are potentially affecting your operations, check out the following links:
Here’s Why Air Cargo Demand Is on the Rise and Some Ocean Exports Aren’t Making the Cut
The goal of The Weekly Roar is to help supply chain professionals like you stay up-to-date because we all work in an industry that’s in constant flux. When ocean shippers are moving to air, 25+% of trucks leaving the UK for EU are empty, senators are calling on the FMC to back exporters, and exporters are taking unusual steps to ease the container shortage, it’s just another average post-pandemic week for us.
Here’s what you need to keep up to speed:
With ocean shipping lead times growing out of control for shippers due to the ongoing capacity crunch, some companies are turning to air in order to avoid the bottlenecks. As a result of this transition, the rise in demand for air cargo is now placing more pressure on limited belly capacity and elevating spot rates as well, causing some carriers to start investing in additional freighters as a way to expand available freight space.
As for Brexit’s impact on shipping over in the UK, “empty lorries leaving the UK accounted for 26% of all truck movements into the EU, with total loaded haulage exports down 47% last month, compared with last year,” according to the Road Haulage Association. If you factor in the steep drop in demand for UK goods, the effects of the new rigid and lengthy import process aren’t looking too good for exporters in the UK.
Back in the U.S., exporters aren’t having much luck either, with many senators reaching out to the FMC to take the necessary actions that will prevent carriers from prioritizing higher-value cargo to maximize their own profits. Meanwhile, government officials in other areas like China and South Korea are taking serious steps to try and prevent their exports from suffering the same fate.
Unsurprisingly, the pandemic has its place in all of this, too. Simon Heaney, senior manager of container research at Drewry Shipping Consultants Ltd., believes “the best thing governments can do is ensure rapid and effective vaccination of their populations so that landside logistics labor capacity and productivity can be restored to pre-pandemic levels.”
To learn more, check out the following article highlights. But first, get an exclusive look at our most recent blog on “How PO Management Software Can Turn the Lights on in Your Supply Chain.”
Where Do Global Supply Chains Go From Here?
From lingering supply chain woes, to the Port of LA’s new vaccination site, to price hikes in air cargo, to moving forward in transportation management, to the UK’s new freeports, there’s a lot to discuss for this week’s global freight update. So, let’s get started.
Unfortunately, solving the container crisis requires more than simply throwing more boxes into the equation, which is why the FMC is cracking down on marine terminal operators and ocean carriers as well as encouraging more collaboration within the industry. If we don’t start focusing on solutions now though, elevated shipping costs are only going to go up from here and possibly even last well into 2022.
In an attempt to boost labor and ease the intense port congestion in Southern California, the International Longshore and Warehouse Union has partnered with local employers to launch a new vaccination site at the Port of Los Angeles. According to Jim McKenna, president of the Pacific Maritime Association, port authorities were aiming to vaccinate 7,000 dockworkers by the end of last week.
As container volumes continue to flood crucial U.S. gateways, the toll COVID-19 is taking on skilled equipment operators is only further escalating the situation at hand. Many are struggling to get their orders in on time while also having to pay high premiums that are eating away at their already slim margins.
Meanwhile, the air freight marketplace is seeing rising fuel prices combined with increasing airline surcharges show how, regardless of the mode, shippers are doing a lot of the heavy lifting when it comes to footing the bill. With ocean shipping maxed out and other sectors not too far behind, it’s becoming more and more apparent how much room for improvement there really is in transportation management.
On a more positive note, UK Chancellor Rishi Sunak has recently revealed the locations of eight new freeports, or free trade zones. Local authorities hope these areas will help simplify the current shipping situation, lower customs costs, and ultimately stimulate the country’s post-Brexit economy.
To learn more about this week’s leading headlines, check out the following international shipping industry highlights:
Have the Major Supply Chain Events of the Past Year Become Normalized?
It’s cliche, but we have to ask. Is this the new normal?
In this week’s global freight updates, we’ve got hidden post-Brexit costs, shippers on the prowl for boxes, the current state of ocean freight – in pictures, CMA CGM branching out, and plunging air cargo rates.
According to The Loadstar, EU consumers are starting to become “more reluctant to order UK brands due to longer transit times and additional costs linked to duty and VAT.” Despite attempts to avoid disruptions, the uncertainty surrounding these costs and the complexity of the reverse logistics process are causing many problems for the country’s apparel brands.
“Every picture tells a story, don’t it.” – Rod Stewart. The song lyric fits when it comes to ocean shipping, too. Instead of repeating the same old story – in words – we’ll do it in pictures. As pretty as big, colorful pictures of ships and containers can be, this is a situation that is not easing. At last report, there were almost 90 container ships anchored outside of U.S. ports waiting for unloading.
As for the current container crunch, some shippers have had enough of the elevated freight rates and overwhelming bottlenecks and are now looking into outright buying the containers themselves. With FEUs up 500% in some areas, many are left questioning whether or not demand will remain strong if these costs are put on consumers.
Next up on the list is CMA CGM’s new in-house cargo airline. The carrier’s first flight is officially scheduled to depart from its home base at Liege Airpot on March 8, giving the industry giant and its subsidiaries yet another leg up in the game. While companies like CMA CGM are working on ramping up capacity, air cargo rates from Shanghai to North America are down 62 percent from last week, according to the TAC Index.
This drop doesn’t exactly paint the full picture, however, given that rates are still up 90 percent on the trans-Pacific in comparison to this same time last year. And factors like limited capacity will likely keep them that way for the rest of the year at the very least.
To learn more about these issues, check out the following article highlights:
What’s the Latest in Ocean and Air?
Things in the international shipping industry are as hectic as ever, but there are some positive signs with air cargo volume decreasing worldwide, forwarders negotiating rates for UNICEF’s vaccine distribution, video evidence of California’s box-ship traffic jam emerging, and container lines ordering new vessels to keep up with demand.
Over in the ocean shipping sector, the U.S. Coast Guard’s latest video footage showing the pileup of container ships anchored across California’s San Pedro Bay revealed just how intense the congestion has become due to unavailable capacity, labor limitations, and increasing delays. While major carriers have been profiting despite these setbacks, they’ve been using their newfound capital to invest in more than $10 billion of container ship new-build contracts as a way to replace aging ships and potentially raise contract rates. Based on data compiled by Bloomberg, “The number of container ships on order rose by 23 to 201 last week, the biggest weekly gain in two years.”
According to The STAT Trade Times, both air cargo volume and capacity declined by 1 percent worldwide between this week and last. The news source went on to state that “on a regional level, origin Africa did best with a volume increase of 6 percent week-over-week, while business from Europe showed the largest decrease (-4 percent).”
After 16 airlines recently committed to support UNICEF’s COVID-19 vaccination program, many are wondering how other air cargo will fare once the vaccines start receiving scheduling priority. With the pricing power left in the hands of 6 forwarders, there are a lot of remaining unknowns surrounding UNICEF’s efforts to secure more reliable, cost-effective capacity.
And that doesn’t even begin to cover the other important events that made headlines this week, like post-Brexit trade barriers, Maersk’s plan to deploy the first zero-carbon container ship, and the IMO’s World Maritime Theme for 2021.
Check out the following article highlights to learn more:
Will Things Get Better in the Spring?
With no letup in sight for the COVID-fueled cargo boom, large ocean container lines are raking in the profits, while shippers struggle to manage the overwhelming demand surge.
It’s interesting to look at the breakdown of revenue and costs for a carrier like Maersk (see chart). And, based on the Maersk Q4 2020 key performance indicators, the carrier has successfully kept operating costs under control through all the market volatility of the past 12 months. According to Freightwaves, “Maersk reported ocean revenues of $8.26 billion for Q4 2020, up 15.5% compared to Q4 2019. Revenue growth was driven by a 3.2% increase in volume, but primarily, by a 17.7% spike in freight rates.”
This marks yet another record quarter for the carrier, and if market conditions continue to follow the current trends, the industry giant expects to end the first quarter of 2021 on an even better note. Despite all of the present uncertainty, Maersk’s CFO Patrick Jany believes spot rates and container volumes should start to ease up in Q2 2021 — hopefully alleviating some of the intense port congestion and container shortages we’ve been experiencing.
But even with that optimism, shipping delays persist and even some Christmas deliveries still have not been made.
As everyone impatiently waits for contract season to arrive, many are working on their strategies for upcoming carrier contract negotiations in an attempt to address the significant supply chain stressors causing chaos at ports everywhere. One crucial move shippers should look out for, especially those involved in Trans-Pacific trade, is the efforts carriers plan on making to reduce contracted free time.
This could mean shippers will have to make some serious adjustments to cut down on the time it takes to return containers, or this could mean that shippers will have to accept higher per diem charges, depending on how negotiations shake out ultimately. As companies prepare to negotiate terms to optimize equipment flow and enforce preventive measures, many industry leaders are also fighting to mitigate the pandemic-driven dockworker shortage by pleading with U.S. regulators for better access to vaccines. Without that critical classification of “front-line worker,” some cargo terminals may have to shut down operations temporarily at the rate that employees are getting sick right now.
To learn more about these issues and other key events going on in the international shipping industry, including electronic BOL’s, an air cargo update, and news about Vietnam’s market-resilience against the pandemic, check out the following highlights:
The Supply Chain Stress Continues!
In this week’s global freight updates, we’ve got harbor truck disputes, increasing congestion and delays, shipping container accidents, and more. As pandemic-driven import volumes continue to overwhelm ports worldwide, the resulting supply chain stressors are exposing the cracks underneath the surface and further escalating detention and demurrage charges in the trucking industry.
Despite efforts on the FMC’s part to ensure that carriers aren’t taking advantage of the current situation, the organization’s inability to legally create new regulation has allowed most supply chain stakeholders to essentially ignore the FMC’s guidelines. And the process of disputing these charges is pretty time-consuming as well, with little hope for trucking companies coming out on top. These fees are only going to increase as port congestion intensifies and dwell times grow longer.
The ports of Los Angeles and Long Beach are displaying just how much of an impact the current container crisis is having on the international shipping industry. According to The Loadstar, some of the 41 ships (as of the article’s publication date) at anchorage could be forced to wait up to two weeks for a berth, which equates to roughly 336,500 TEU of idled capacity. Port authorities are now strongly advising carriers to avoid contributing even more traffic to this port lockdown chaos by pushing them toward other gateways in the Pacific Northwest.
As if these conditions aren’t stressful enough, let’s tack on the problematic shipping accidents that have been piling up over the last couple of months. Based on the Wall Street Journal’s recent take on this issue, also known as “parametric rolling,” the sheer size of today’s ships combined with the weight of stacks and stacks of boxes have both ultimately decreased the stability of ocean vessels, which is why we’re seeing a spike in the number of container losses.
To learn more about these events as well as this week’s other top stories, like Brexit trade disruptions, air charter contract extensions, and Jeff Bezos’ impending replacement, check out the article highlights below:
The fight for shipping containers continues!
Shippers are stuck between a rock and a hard place right now. And the only ones getting their freight on ships are those that can still reach their wallets.
As shipment delays grow out of control and shipping costs skyrocket, the critical lack of ocean containers is forcing companies to pay premium prices after waiting weeks to get their hands on the necessary equipment. Spot rates from Asia to the U.S. West Coast are up 145 percent YoY, while rates from Asia to North Europe are up 264 percent YoY, and at the center of the problem lies carriers’ aggressive return of empties back East.
Some companies are reporting that 3 out of 4 of the containers coming from the U.S to Asia have nothing in them, and the U.S. isn’t the only one experiencing this issue. Ocean carrier schedule reliability is also at an all-time low, which likely won’t change any time soon if demand remains the same and the resulting bottlenecks keep clogging up trans-Pacific routes. According to JOC, the average delay for late vessels on the West Coast reached 7.99 days in December, while on-time performance fell by 70.9 percent YoY.
Many regulators are already well aware of the situation due to the increasing number of shipper complaints lodged against low service levels and excessively high freight rates. Some hope that the current repositioning of containers will eventually lead to a turning point, especially with the Chinese New Year approaching soon. No one expected consumer spending patterns to take off like they did, and this pandemic-induced spike in demand revealed just how many inefficiencies were lurking beneath the surface.
Similar to the decline in ocean freight capacity, air cargo capacity has also dropped by 16 percent over the last two weeks in comparison to this same time last year. Despite the growth trans-Pacific trade lanes have shown, other crucial routes around the globe are still struggling to support the sustained influx of cargo demand.
To read more on topics like 17-foot wave woes and problematic box spills, check out the following article highlights:
Ocean Freight: Let’s Talk About the Elephant in the Room
In this week’s global freight updates, we’re bringing readers an ocean freight-heavy report that provides views and news on the current situation, including spikes in rolled cargo, record-level imports, a potential ocean freight rate cap, a challenging shipping container market, and more.
Right now, it’s hard for shippers to even get cargo onto ships. 75 percent of the 20 transshipment ports Ocean Insights surveyed experienced an increase in rates of rolled cargo in December, with an overall 37 percent MoM increase as well. According to Sea-Intelligence, blanked sailings are anticipated to make up between 13 and 11 percent of overall capacity in the third and fourth week of this month, respectively. Carriers are making efforts to add vessels to their networks, however, as a way to combat these issues, so capacity is projected to rise by 21 percent and 34 percent YoY for those same weeks.
According to a recent JOC article, U.S. imports from Asia reached an all-time December high, indicating that the surge in container volumes that’s been overwhelming U.S. ports since June shows no signs of slowing in the near future.
With 1.626 million TEU on the books last month, we’re seeing a 29.9 percent YoY increase in container volumes between December 2020 and December 2019. This also marks the third-highest monthly volume of 2020, which totaled 16.6 million TEU overall. Because of the strong demand for PPE, medical supplies, and e-commerce merchandise, intermodal traffic and port congestion were also a lot more intense in the eastbound trans-Pacific than they normally would be for this time of year.
As for the regulatory measures that are being taken, China’s Ministry of Commerce and the U.S. Federal Maritime Commission are both keeping a close eye on FAK market conditions. There’s even been talk that the former may be looking to start enforcing some antitrust measures to help control container shipping’s excessive rates and equipment shortages.
This help could not come any sooner though because there are essentially no TEUs available to anyone unless they’re willing to pay three times the typical going rate just to get their goods out of the ports of Los Angeles and Long Beach. And those who refuse to pay FEU prices for TEU containers are just getting rolled over and over until air freight becomes their only option, while the number of empties returning to China is up 55 percent YoY. With global demand significantly outpacing equipment availability, added surcharges are only serving to kick shippers and their logistics service partners while they’re down.
To learn more about these ongoing problems and the other top stories of this week, check out the following article highlights:
A big shoutout from the JOC!
In a field where competition is killer and you’re up against advancing e-commerce platforms and various tech startups, the key to surviving lies in investing in new forms of automation.
According to JOC’s Senior Technology Editor, Eric Johnson,
“Individual forwarders and non-vessel-operating common carriers (NVOs) are tackling the mandate to be more technologically proficient head-on … New York-based Jaguar Freight is using a mix of in-house-developed systems and off-the-shelf software to build a framework that helps it attract and retain customers.”
Not only are we happy to receive this shoutout, but we’re also excited to see how far the industry has come as a whole in its embrace of digitization.
Shoutouts aside, here’s what else we’ve found that’s noteworthy this week:
As we encounter cargo-ship charters equating to $350,000 per day, saving on shipping costs is now arguably more important than ever, so it’s no wonder companies are hopping on board the tech train. Not to mention the fact that supply chain risks seem to be amplifying as ocean carrier networks grow smaller and smaller.
With global container capacity and port congestion the most prominent issues facing the ocean shipping industry, one initiative that will theoretically ease some of them for Europe – the Silk Road – is seeing some success. But, it’s not without its own challenges.
And European-based exporters are getting the worst of things between the tight conditions in Asia lanes and Brexit continues to cause problems for the region. With increasing equipment imbalance surcharges, added security checks, complex documentation, and new taxes, the costs of transporting U.K. goods are at an all-time high. According to Bloomberg, the additional fees that are being placed on “flight trucks” can reach up to 3,000 pounds.
To learn more, check out our article highlights below, and click the last link to view some important dates you should keep in mind for upcoming key trade events in 2021.
Global Freight Updates Delivered To You!
With short-term freight snags, limitations against EU regulators, U.K. lockdowns, an avg. of 30 vessels at anchor waiting at the Ports of LA/ Long Beach all last week, increasing supply chain debt, decreasing blanked sailings, and a tight air cargo market 2021 is already off to a rocky start for supply chain all over the globe.
It’s been over a week since public officials finalized the Brexit trade deal otherwise known as the European Union-United Kingdom Trade and Cooperation Agreement. Because of the last-minute nature of the deal, many European manufacturers (especially those in the automotive sector) were given very little notice to adapt their processes to the deal’s lengthier documentation requirements. As border delays continue to get out of hand, the U.K. remains the only country to offer a 6-month grace period.
Unfortunately, the European Commission is pretty limited when it comes to what it can do right now. These limitations are also affecting the organization’s ability to respond to the complaints shippers are lodging against carriers who are violating their shipping contracts. And demand for goods like exercise equipment shows no sign of slowing amid Europe’s recent coronavirus lockdowns and the unprecedented lack of blanked sailings for the Chinese New Year, which is only pushing up shipping rates.
Speaking of high rates, epic delays are continuing for the Ports of LA/Long Beach. And the premiums paid by importers in the Asia/ U.S. trades are unprecedented. From JOC.com:
Spot rates in Asia-North America trade are about $4,000 per FEU to the West Coast and $5,000 per FEU to the East Coast, although carriers and freight forwarders say importers are paying as much as $6,000 per FEU to the West Coast and $8,000 per FEU to the East Coast when the cost of premium equipment and space guarantees are added to the base freight rate.
Shipping demand and rates aren’t the only things in the industry that are spiking, however. According to Bloomberg, bad supply chain loans equating to 25.5 billion euros, or $31.3 billion, are on the rise due to the European Banking Authority cracking down on lenders in the region. Since larger companies typically pay their bills late, the new standard stating that receivables booked on a firm’s balance sheet will be considered past due after 30 days poses a pretty big problem for many businesses.
On a more positive note, what has been a pretty tight market for air freight seems to be finally improving as various airline carriers continue to add more capacity to their fleets. To learn more, check out our article highlights below:
Global Freight Updates Delivered To You!
In the first Weekly Roar of what’s going to be a great new year:
The EU continues to wheel-and-deal, wariness remains for some persistent global supply chain roadblocks, blockchain continues its uphill fight for relevancy, why rail is cool again, and the obligatory international doom and gloom (with a little positive thrown in.)
It’s 2021, so let’s go!
With Brexit checked off the to-do list (sort of), the European Union has struck a trade deal with China. There is a lot of opposition to it, however, both internally within Europe and from the U.S. Notable is that China edged out the U.S. as the EU’s largest trading partner with $590B in two-way trade in 2020 based on the latest figures.
The pandemic is easily the top news story impacting supply chains in 2020, and will continue to be in 2021. But, other issues and opportunities exist as well. A tough global economic outlook, as well as political unrest in many regions mean this year will be anything but easy. But, new technologies, such as 5G, seem poised to start fulfilling their promise.
Speaking of technology and potential… for the first time in a while, there’s been mention of blockchain in the news. It’s not good news, unfortunately, especially for those holding out hope a blockchain-related technology would find its place in the supply chain. A long-standing concern for many tradeable tokens has been if the U.S. Securities and Exchange Commission would flex its muscle, and it’s recently done so with one of the more well-known shipping related offerings. It appears that for the time being, blockchain will continue facing the criticism of being a solution in search of a problem – at least as it relates to shipping.
The underappreciated workhorses of global supply chains are the railroads. And in the U.S., rail is seeing a resurgenc
e, thanks in large part to the growth of e-commerce.
And finally, as much as we want to just make it go away, the rate, congestion, and capacity challenges remain around much of the world. We’ve got JOC’s 2021 outlook for the air cargo marketplace with a little bit of positive news from some California ports.
For more details on all of these topics, see the articles below. And, Happy New Year!
Last Call for those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
Global Freight Updates Delivered To You!
This week’s global freight updates mark the last critical events of this year as we start to officially countdown to 2021. With a Brexit deal done, relief for hundreds of stranded truck drivers, ocean freight madness, soaring airfreight rates, unpredictable freight costs, strong container spot rates, and megamax boxships we’ve got a lot in store for you.
The big news in Europe is a draft EU-UK Trade and Cooperation Agreement is in place with 0 tariffs and quotas on goods shipped (a.k.a the Good.)
And it appears freight madness like this is only going to spill over into 2021, according to The Loadstar’s recent supply chain radar analysis. While many believe that the pandemic-induced disruptions of 2020 have completely altered the industry as we knew it, some anticipate a swift recovery for maritime trade in 2021 in the form of 4.8% growth. One question that’s on everyone’s mind though is: How will the current elevated spot rates end up affecting next year’s contract service negotiations?
For those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
As for the airfreight sector, rates from China to the U.S. have reached $8.02 per kilogram, spiking 58% (a.k.a the Bad) over the last couple of months despite the fact that demand was down by more than 6% YoY in October. With the release of the new COVID-19 vaccine, some expect air cargo demand to increase by 2% YoY, which could potentially raise rates even more over the next six months.
After a new variation of COVID-19 was discovered in the U.K., other nations began closing their borders to the country, at one point leaving more than 1,500 trucks (a.k.a. the Ugly) stuck in empty ports and airports across Britain. Depending on travel restrictions, some fear the strict coronavirus precautions could produce major supply chain disruptions and even lead to food shortages throughout Europe. There appeared to be some improvement in the situation in the past few days, fortunately, but a backlog persists.
To wrap up the last freight updates of the year, we’ll end on Hapag-Lloyd’s $1B investment in six massive LNG container vessels that individually hold 23,500+ TEU container capacity. The carrier will receive these eco-friendly, modernized ships as early as April 2021 and plans to use them to gain a competitive advantage on Europe-Far East routes.
On that note, we hope you enjoyed our Weekly Roars, check out the article highlights below to read more. Happy Holidays!
Global Freight Updates Delivered To You!
EU carbon charges, UK port congestion, surging container freight rates, a whirlwind peak season, the South African Airways lockout, and the new U.S. Transportation Secretary, oh my! We’ve got a lot to unpack in this week’s global freight updates.
But first – We’d like to offer you our 2021 desktop calendar – kindly let us know where we can send it and it’ll be on its way! Claim your 2021 Jaguar desk calendar – click here
Let’s dive in by starting with the European Commission’s plans to make big changes in the shipping carbon market.
As of right now, the Commission remains undecided on whether or not it will include international trips in its ambitious emissions trading scheme plans. Many in the sector, however, are protesting what they believe to be an overreach on the Commission’s part to regulate the industry as it works toward its goal to reduce net emissions by at least 55% over the next 9 years.
Next up, we’ve got the port chaos that’s currently wreaking havoc on UK supply chains for 45% of manufacturers. With the severe strain caused by the impact of leading issues like COVID-19 and Brexit, the nation’s factories are reporting steep rises in lead times and stockpiled goods.
The UK certainly isn’t the only one struggling to overcome massive transportation complications though. Countries around the world are scrambling to manage the distribution of the new coronavirus vaccine alongside the huge spikes in e-commerce imports primarily from China. And the U.S.-China trade war is only making matters worse.
Some ocean shipping lines have even refused to transport U.S. exports in an effort to prioritize taking back empty containers to China. Not to mention the fact that spot rates are continuing to soar everywhere, especially for Asia-North Europe lanes receiving quotes up to $5,000 per TEU.
And airfreight doesn’t have it any easier either. For instance, after declaring bankruptcy and then being forced to ground many flights last year, South African Airways recently put a temporary lockout into effect against 383 pilots due to reluctance over the airline’s new employment terms.
Last, but not least, U.S. President-elect Joe Biden has officially nominated Pete Buttigieg, former mayor of South Bend, Indiana, to lead the country’s Transportation Department. To learn more, check out the following article highlights:
Global Freight Updates Delivered To You!
As we prepare to say good riddance to 2020 and leap into 2021, there are still no dull moments for many parts of the shipping industry. Year-end, peak season, Brexit, and the impact of the pandemic are all (hopefully) coming to a head. We’ll know if this means calmer seas in 2021 soon enough.
In this week’s global freight updates, we’ve got record-level spot rates, port chaos, a commodities slump, thousands of stranded seafarers, outrageous air freight prices, and rising market tension.
According to Sea-Intelligence Maritime Analysis, 2021 base contract rates for Asia-Europe shippers are expected to increase by 23 percent as a result of a surge in spot rates. With freight prices sitting at $2,091 per TEU, unwavering demand, and severe capacity contraints, the tension between shippers and carriers is only growing.
These conditions paired with the impending end of Brexit recently forced Honda to shut down its entire UK plant because of the country’s overwhelming amount of bottlenecks and transportation delays. Britain isn’t the only country experiencing some major setbacks, however. Africa’s exports to China have fallen by 23.6 percent YoY due to COVID-19’s impact on the nation’s economy and a drop in commodity prices.
Because of travel restrictions, the cornavirus has also left roughly 400,000 shipping and transportation workers stranded on ships for over a year and a half. While agencies like the U.N.’s International Labour Organization are working tirelessly to get these people home, crew changes ultimately can’t happen without additional support from countries around the world.
Ocean container shipping isn’t the only sector that’s facing some serious coronavirus-related issues though. As shippers race to secure air freight capacity for medical equipment like dry ice to transport the new vaccines, some airlines are quoting up to 20 times more than the average going rate for this time of year. Despite all of these struggles, one thing that’s for sure is that there’s never a dull moment in this business.
Check out the article highlights below to learn more:
Global Freight Updates Delivered To You!
Worried about recent cyber-attacks? Can’t find containers? Concerned over the Panama Canal’s congestion? Frustrated with rate increases and carrier service? Want to learn more about canceled flights to LA? Dreading the post-Brexit logistics nightmare? Don’t worry. We’ve got the inside info to help you better understand the most pressing issues the shipping industry is facing right now, and there’s no shortage of them!
To start off, here are some ocean container stats we believe are pretty telling for the Port of Long Beach’s 2020 operations provided by Cathy Roberson, President of Logistics Trends & Insights LLC:
“For the July-September period, loaded inbound TEUs to the Port of Long Beach increased 22.6% YoY.
According to USA Trade Online data, some of the biggest YoY gains in terms of volumes (Kg) for Asian import commodities, based on harmonized 2-digit codes, to the Port of Long Beach were:
Miscellaneous chemical products up 404.4%
Tobacco up 368.9%
Wadding, felt, specialty yarn, twine, ropes up 247.8%
Food industry residues and waste 279.5%
Arms & ammunition, parts and accessories 207.2%”
Next up, we’ve got Acronis’ new in-depth review on the risk of cyber threats in the supply chain, which includes detailed analytics on ransomware spikes, 2021 cybersecurity trends, key takeaways, and more. This report makes it clear that ransomware attacks will increase, especially against remote employees; however, traditional solutions won’t be able to provide sufficient protection against advancing malware tactics.
And, the struggle to find containers continues. From the article we’ve included below: “All carriers report severe shortages of the popular 40ft high-cubes (HCs) at their depots, and there has also been a run on 40ft standard boxes – even 20ft containers are sometimes showing as unavailable.”
Not only do we have to deal with rising threats to data security and a container shortage, but we’ve also been facing some pretty major transit delays in the Panama Canal as COVID strikes again and shippers without reservations fight for limited capacity. Adding to that, rates and surcharges on trades from Shanghai to the U.S. West Coast, Australia, West Africa, the East Coast of South America, and Singapore are at all-time highs while carrier service levels have fallen to all-time lows.
And COVID isn’t only impacting ocean freight. According to Loadstar, Air China and China Southern have canceled all flights to LA until Dec. 10 because of the city’s recent coronavirus outbreak, with expectations of other airlines following suit. Last, but not least, we’ll end on the U.K.’s fear of Brexit’s potential to create a domino effect of severe supply chain bottlenecks across the country’s ports and highways. All in all, the industry appears to be right on track to reach its boiling point, but with insight like this on your side, you’ll have a much better chance of preparing your company to take on these challenges.
Check out the article highlights below to learn more:
